Tuum, the core banking provider, announced the launch of its foundational Islamic Banking and Finance solutions, marking a key milestone towards delivering comprehensive, Sharia-compliant financial services.
This initiative is said to focuse on the main principles of Islamic banking, laying the groundwork for a platform intended to support the needs as well as requirements of Islamic financial institutions.
With this launch, Tuum explained that it is creating the infrastructure for Islamic deposits and “asset-based lending,” two vital components of a broader Islamic banking system.
This Minimum Viable Product (MVP) ensures that financial institutions can offer products that fully “comply with Sharia law while preparing for further expansion into a complete Islamic banking suite.”
At the heart of this launch is the development of a profit-sharing system for Islamic deposits, based on the concept of Mudarabah (profit-sharing).
This system allows returns to be generated through legitimate economic activities, with profits shared between banks and depositors according to pre-agreed ratios, rather than through interest-based income.
Key features of the deposit solution include:
- Sharia Compliance: Ensuring all profit calculations adhere to Islamic principles, avoiding interest and focusing on ethical profit generation.
- Transparency: Promoting trust through a predefined profit-sharing agreement, ensuring clarity for both institutions and clients.
- Foundation for Growth: Establishing a robust system that will serve as the basis for future expansion of Islamic deposit offerings.
Simultaneously, Tuum is developing the framework for an Islamic asset-based lending solution, which aligns with the “prohibition of riba (interest) and requires all lending to be tied to real, tangible assets.”
The key elements of this system reportedly include:
- Sharia Compliance: Ensuring that all lending is conducted according to Islamic finance principles, linking financing to real economic activities.
- Profit and Risk Sharing: Creating structures that share both risks and profits, in line with Islamic ethical finance principles.
- Scalable Growth: Providing a foundation for future Islamic finance models, including Murabaha, Ijara, and Musharakah, to create a comprehensive Sharia-compliant financing ecosystem.
Although the initial focus is on deposits and asset-based lending, Tuum is committed to evolving its platform to “support the full spectrum of Islamic finance.”
This initiative aligns with the demand for Sharia-compliant banking and will empower financial institutions to “offer inclusive, ethical banking products.”
As Tuum continues to innovate, the platform’s flexibility and scalability will ensure that it remains at the “forefront of Islamic banking, providing financial institutions with the tools they need to meet the evolving demands of the market.”
At Tuum, their mission is to allow banks to “replace their legacy systems quickly and safely, to lower their maintenance spending and to open up new possibilities to adapt and prosper in the digital world; in short, to set them free.”
They employ a “smart” migration approach in order to help banks to move off their current systems.
Using this approach, their clients go-live “on average within 7 months.”
Once live, their system enables banks to launch various products as well as open up new verticals.
Offering more than core, Tuum allows banks to operate business lines from a single system, reportedly including “accounts, lending, payments and cards, as well as go further through access to a pre-configurated ecosystem of partner solutions.”
Tuum also allows for business transformation.
Their business builder gives banks the settings to configure their operating, sourcing and distribution models to launch models in order to “capitalize on the possibilities of digitization.”